New UCL "unlawful" prong decision: SC Manufactured Homes, Inc. v. Canyon View Estates, Inc.

This case came down shortly before all the excitement surrounding In re Tobacco and Pfizer. In SC Manufactured Homes, Inc. v. Canyon View Estates, Inc., ___ Cal.App.4th ___ (Oct. 27, 2006), the plaintiff's UCL "unlawful" prong claim was predicated on an alleged violation of the Mobilehome Residency Law ("MRL") (Civ. Code §§ 798 et seq.). After filing suit, the plaintiff voluntarily dismissed some of the defendants from the action. Slip op. at 9. Those defendants moved for attorneys' fees under the MRL, which has an attorneys' fees provision. Id. The trial court denied the motion, and the Court of Appeal (Second Appellate District, Division Three) affirmed. Id. at 10.

The Court of Appeal expended a great deal of energy examining whether the action "arose out of" the MRL. Id. at 10-21. However, the case could have been resolved much more simply. The UCL's "unlawful" prong "borrows" the underlying statute's liability provisions; it does not "borrow" the underlying statute's remedies. UCL remedies are limited to restitution and injunctive relief. Attorneys' fees are unrecoverable in this action because the UCL has no attorneys' fees provision, even if the underlying, "borrowed" statute does. The reasoning is similar to that employed by federal courts when they hold that a UCL "unlawful" prong claim predicated on an alleged violation of federal law does not "arise under" federal law and is therefore not removable to federal court.